IMF cautions against relying solely on subsidies and tax breaks for slow economic growth, suggesting diversified innovation support policies.

The IMF warns that industrial policy initiatives like subsidies and tax breaks aren't a guaranteed solution for slow economic growth. Although well-executed industrial policies can drive innovation, history is full of cautionary tales. The IMF urges countries to adopt a broader mix of policies, including public funding for research, R&D grants, and tax incentives, to support innovation. Increasing public spending on research by 0.5% of GDP annually could raise GDP by up to 2%.